Split D.C. Circuit Panel Holds that CEQ Lacks Authority to Issue NEPA Regulations

On November 12, 2024, the D.C. Circuit Court of Appeals issued a ruling in Marin Audubon Society v. Federal Aviation Administration holding that the White House Council on Environmental Quality (CEQ) lacks the authority to issue binding regulations implementing the National Environmental Policy Act (NEPA). If this ruling stands, it could throw decades of environmental policy into question and provide an opportunity for the incoming Trump Administration to overhaul NEPA implementation.

Generally, NEPA requires federal agencies to conduct a detailed assessment of the environmental impacts of all “major” federal actions that could significantly affect the environment. CEQ was established within the Executive Office of the President as a part of NEPA and was directed by an executive order to issue implementing regulations for NEPA. CEQ issued the first set of NEPA regulations in 1978.

Marin Audubon Society v. Federal Aviation Administration involved a challenge to an Air Management Tour Plan (the Plan) issued by the Federal Aviation Administration (FAA) and National Park Service (NPS). The Plan governed flight tours over four national parks near San Francisco. Several groups argued that the agencies failed to properly comply with CEQ’s NEPA regulations because they did not conduct an environmental assessment or environmental impact statement before issuing the Plan. The Agencies decided that an environmental assessment or environmental impact statement was unnecessary because they believed the Plan would ultimately benefit the environment compared to current conditions under an interim operating authority. The court unanimously held that it was arbitrary and capricious to use existing conditions under the interim operating authority as the baseline for assessing the environmental impacts of the Plan.

Although CEQ’s authority was not challenged by either party, a majority of the court held that CEQ has no lawful authority to promulgate binding NEPA regulations. Writing for the majority, Senior Judge Randolph explained that “no statutory language states or suggests that Congress empowered CEQ to issue rules binding on other agencies – that is, to act as a regulatory agency rather than as an advisory agency.” Moreover, the split panel held that the CEQ NEPA regulations are “ultra vires,” or beyond the legal authority of CEQ.

Because it held that the agencies’ environmental baseline was arbitrary and capricious and that they relied on regulations that CEQ had no authority to issue, the majority concluded that the agencies would have to “take a completely different tack to complete their NEPA review.” The majority vacated the Plan despite the fact that no party requested that remedy.

Chief Judge Srinivasan wrote a partial dissent, disagreeing with the majority’s holding on CEQ’s NEPA regulation and criticizing the majority’s ruling as violating the established “principle of party presentation,” which dictates that courts should only rule on issues that have been presented and argued before them.

Implications of the Court’s Decision

The court’s decision does not explicitly vacate any CEQ actions, but it does establish a precedent that CEQ rules may not be legally enforceable.

The Biden Administration can push for the full D.C. Circuit Court to take a fresh look at the case, known as an en banc review, or seek review by the U.S. Supreme Court. If the Biden Administration decides to move forward with an appeal, it will have to hand off the case to the Trump Administration soon thereafter. It is possible that the Trump Administration would choose not to defend CEQ’s regulatory authority.

Notably, this case illustrates the level of deference that courts may afford to agencies in the wake of the Supreme Court’s June 2024 ruling in Loper Bright Enterprises v. Raimondo. In Loper Bright, the Supreme Court overruled the Chevron Doctrine, meaning that courts no longer must defer to agency interpretations where statutes are silent or ambiguous. Senior Judge Randolph noted that previous Supreme Court precedent entitling CEQ regulations to “substantial deference,” cannot be given credence considering the Supreme Court’s ruling in Loper Bright.

The D.C. Circuit’s ruling may also impact a pending case before the U.S. Supreme Court that is scheduled to be argued on December 10, 2024. In Seven County Infrastructure Coalition v. Eagle County Colorado, the Supreme Court will consider the proper scope of NEPA reviews. The Seven County Infrastructure Coalition is sponsoring the development of a rail line in Utah, which required project approval from the federal Surface Transportation Board (STB). In 2021, the STB approved Seven County’s proposal. Eagle County challenged the Board’s approval in the D.C. Circuit, asserting the NEPA analysis was inadequate because it failed to consider the impacts of the oil wells and refineries served by the rail line. The D.C. Circuit agreed, ruling that the STB’s environmental impact statement was deficient for focusing only on the impacts of actions within its statutory authority. The U.S. Supreme Court granted a review of the case to resolve a split among the courts of appeals over whether NEPA requires an agency to study environmental impacts beyond the proximate effects of the action over which the agency has regulatory authority. Oral arguments are set for December 10, 2024.

Contact your BBK attorney or the BBK authors of this alert if you have questions regarding the potential implications of this decision for your organization.

Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation, or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.